U.S. patent application number 09/836810 was filed with the patent office on 2002-03-07 for e-commerce payment system.
Invention is credited to Beitner, Nick, Dewdney, Oliver, Jordan, William, Russell, Jon, Underwood, Richard.
Application Number | 20020029195 09/836810 |
Document ID | / |
Family ID | 9890094 |
Filed Date | 2002-03-07 |
United States Patent
Application |
20020029195 |
Kind Code |
A1 |
Russell, Jon ; et
al. |
March 7, 2002 |
E-commerce payment system
Abstract
Cards confirming to credit card standards and having numbers
forming part of a credit card clearing system are sold for
predetermined amounts. This amount constitutes an initial balance
for the card. The card is used in the normal manner, with all
transactions being authorized and deducted from the initial
balance. When the balance to the card is exhausted the card is
discarded or may be replenished.
Inventors: |
Russell, Jon; (Kent, GB)
; Beitner, Nick; (London, GB) ; Dewdney,
Oliver; (Surrey, GB) ; Underwood, Richard;
(Hampshire, GB) ; Jordan, William; (Chaigley,
GB) |
Correspondence
Address: |
MORRISON & FOERSTER LLP
425 MARKET STREET
SAN FRANCISCO
CA
94105-2482
US
|
Family ID: |
9890094 |
Appl. No.: |
09/836810 |
Filed: |
April 17, 2001 |
Current U.S.
Class: |
705/40 ; 235/380;
705/39 |
Current CPC
Class: |
G06Q 20/04 20130101;
G06Q 20/10 20130101; G06Q 20/102 20130101; G06Q 20/342 20130101;
G06Q 20/4037 20130101; G06Q 20/385 20130101; G06Q 20/363 20130101;
G07F 7/0866 20130101; G06Q 20/28 20130101; G07F 7/025 20130101;
G07F 7/08 20130101 |
Class at
Publication: |
705/40 ; 705/39;
235/380 |
International
Class: |
G06F 017/60; G06K
005/00 |
Foreign Application Data
Date |
Code |
Application Number |
Apr 17, 2000 |
GB |
0009478.9 |
Claims
We claim:
1. A method of effecting a transaction comprising the steps of:
providing a plurality of carriers, each carrier bearing resolvable
identification data; establishing a database matching said
resolvable identification data of each carrier with a corresponding
monetary value; supplying a carrier to an end user in return for a
monetary payment; and responsive to a request from a merchant for
payment of a transaction value in respect of one of said carriers
identified by first identification data: verifying that said first
identification data validly identifies one of said carriers;
determining whether the monetary value stored in said database
corresponding to the identified carrier is sufficient to effect
said payment; where the corresponding monetary value is sufficient,
decrementing the stored monetary value by an amount equivalent to
said transaction value and indicating to said merchant that the
transaction is effected; and where the corresponding monetary value
is insufficient, indicating to said merchant that the transaction
is refused.
2. A method according to claim 1 wherein said identification data
comprises a credit card number and a corresponding alphanumeric
string.
3. A method according to claim 2 wherein said alphanumeric string
includes a coded checksum of said credit card number.
4. A method according to claim 1 wherein said carrier comprises a
credit card.
5. A method according to claim 1 wherein said carrier comprises a
smart card.
6. A method according to claim 1 wherein, in said step of
determining, said monetary value is determined to be sufficient if
it exceeds said transaction value by a predetermined minimum
residual amount.
7. A method according to claim 6 wherein said predetermined minimum
residual amount is zero.
8. A method according to claim 1 wherein: each of said carriers has
an associated activation code; and said step of supplying comprises
the steps of; informing said user of said activation code
separately from said carrier; and activating said carrier in
response to a request from said user including said identification
data and said activation code.
9. A method according to claim 8 wherein said activation code is a
four digit number.
10. A method according to claim 8 wherein said activation code is
printed on a separate member covered by an irreplaceable mask.
11. A method according to claim 10 wherein said separate member
comprises packaging for said carrier or an accompanying
leaflet.
12. A method of effecting transactions comprising the steps of:
establishing a database of initial values balances for a plurality
of resolvable cards; receiving requests for authorisation of
transactions, each said request including identification data
identifying one of said plurality of cards and a transaction value;
and, for each request: comparing said transaction value to the
value balance of the one of said plurality of cards identified by
said identification data; where said value balance is greater than
or equal to said transaction value, decrementing said value balance
by the amount of said transaction value and transmitting an
authorisation signed to the sender of said request.
13. A computer program product comprising a computer-readable
storage medium having stored thereon computer program code means
adapted, when loaded on a computer, to instruct the computer to
perform the steps of: establishing a database of initial values
balances for a plurality of resolvable cards; receiving requests
for authorisation of transactions, each said request including
identification data identifying one of said plurality of cards and
a transaction value; and, for each request: comparing said
transaction value to the value balance of the one of said plurality
of cards identified by said identification data; where said value
balance is greater than or equal to said transaction value,
decrementing said value balance by the amount of said transaction
value and transmitting an authorisation signed to the sender of
said request.
14. A carrier mover having modulated thereon computer program code
means adapted, when loaded on a computer, to instruct the computer
to perform the steps of: establishing a database of initial values
balances for a plurality of resolvable cards; receiving requests
for authorisation of transactions, each said request including
identification data identifying one of said plurality of cards and
a transaction value; and, for each request: comparing said
transaction value to the value balance of the one of said plurality
of cards identified by said identification data; where said value
balance is greater than or equal to said transaction value,
decrementing said value balance by the amount of said transaction
value and transmitting an authorisation signed to the sender of
said request.
Description
FIELD OF THE INVENTION
[0001] The present invention relates to payment systems principally
but not exclusively for use in e-commerce.
BACKGROUND OF THE INVENTION
[0002] A fundamental requirement of any form of commerce is the
ability to transfer payment securely from the buyer of goods or
services to the seller. In face-to-face transactions in the real
world, such methods as cash, cheques, credit cards (including
various forms of debit and charge cards) and vouchers of various
forms are well known and have various advantages and disadvantages
for different situations and users. Credit cards are also widely
used over the telephone in so-called "Cardholder Not Present"
transactions, in which the cardholder reads out the card number and
other details to an operator or merchant or enters them via the
telephone keypad.
[0003] Security in credit card transactions is provided by the
signature on the reverse of the card, by using a Personal
Identification Number (PIN), especially for cash withdrawals from
Automated Teller Machines (ATMs), and by electronic on-line
authorization of transactions. In telephone transactions a
signature cannot be asked for or verified whilst giving over a PIN
to an operator or merchant would breach that security. For
telephone transactions, security can sometimes be provided by
allowing only deliveries to the registered address of the
cardholder or by requiring the cardholder to collect the goods in
person and produce the card whereupon a signature can be verified.
Nevertheless security concerns remain and a criminal can often
cause significant loss over an indeterminate period to the
cardholder and/or issuer with misappropriated cards or card
details.
[0004] E-commerce over the Internet presents additional security
concerns; it is difficult for a user to verify the bona fides of
the operator of the website from which a purchase is contemplated
and, in spite of the widespread use of effective encryption
protocols, many users remain concerned that personal information,
including credit card details, sent over the Internet may be
intercepted and misused. A variety of systems, often involving
so-called "trusted third parties" have been proposed to get around
these and other concerns and to enable so-called "micro-payments"
which are too small for credit card payment to be cost-effective.
None of the presently proposed systems has obtained sufficiently
large scale acceptance to be effective.
[0005] Various pre-payment systems, such as telephone cards and
meter keys, by which metered utilities can purchased are known.
However, these pre-payment systems generally require dedicated
hardware at the point of use and recharge and many systems are
technically incompatible with each other. They are also not
generally applicable to other types of transaction.
BACKGROUND OF THE INVENTION
[0006] Accordingly, it is an object of the present invention to
provide a transaction and payment system that is secure, easy to
use and widely acceptable.
[0007] The present invention therefore provides a method of
effecting a transaction comprising the steps of:
[0008] providing a plurality of carriers, each carrier bearing
resolvable identification data;
[0009] establishing a database matching the resolvable
identification data of each carrier with a corresponding monetary
value;
[0010] supplying a carrier to an end user in return for a monetary
payment; and
[0011] responsive to a request from a merchant for payment of a
transaction value in respect of one of the carriers identified by
first identification data:
[0012] verifying that the first identification data validly
identifies one of the carriers;
[0013] determining whether the monetary value stored in the
database corresponding to the identified carrier is sufficient to
effect the payment;
[0014] where the corresponding monetary value is sufficient,
decrementing the stored monetary value by an amount equivalent to
the transaction value and indicating to the merchant that the
transaction is effected; and
[0015] where the corresponding monetary value is insufficient,
indicating to the merchant that the transaction is refused.
[0016] Because the payment card of the present invention is
pre-paid, the user's exposure to loss or fraud is limited to the
sum invested and this cannot be circumvented in any way.
[0017] This provides instant reassurance to the user. By
maintaining compatibility with an existing credit card system, e.g.
VISA (RTM), the system of the present invention ensures immediate
wide scale acceptability of the card and avoids any concerns that
the user may have that he or she will not find places to spend the
sum invested in purchase of a card.
[0018] The present invention has an additional significant
advantage that it makes available the ever-expanding areas of
commerce that require the use of credit cards to people who, for
reasons of youth or personal circumstances, cannot obtain
traditional credit cards. Furthermore the system allows purchases
to be made anonymously.
BRIEF DESCRIPTION OF THE DRAWINGS
[0019] The present invention will be described below with reference
to a detailed description of an exemplary embodiment and the
accompanying schematic drawings, in which:
[0020] FIG. 1 is a flow diagram illustrating the overall payment
system according to an embodiment of the invention;
[0021] FIGS. 2 to 5 are flow diagrams illustrating various forms of
transaction permitted in the embodiment of the invention;
[0022] FIG. 6 is a flow diagram of a transaction authorization
process according to the embodiment of the invention;
[0023] FIG. 7 is a flow diagram of a card recharging process
according to the embodiment of the invention; and
[0024] FIGS. 8A and B illustrate the front and reverse faces of a
payment card according to the present invention.
[0025] In the drawings, like parts or steps are indicated by like
references.
DETAILED DESCRIPTION OF A PREFERRED EMBODIMENT
[0026] As shown in FIG. 1, the payment system begins in step S1
with manufacture of carriers, or cards, the assignment of an
initial value to the card, step S2, and the supply of the card to
an end user, step S3. The supply (sale) of pre-pay cards to end
users may be done by any suitable retail outlet or financial
institution, by automatic vending machine, by mail or telephone
order or via the Internet. Each card has a resolvable identity and
carries identification data to indicate this. The identity need not
necessarily be completely unique; card identities may be recycled
in certain circumstances. A presently preferred example of a card
is shown in FIGS. 8A and B. The card 10 preferably conforms to
relevant credit card standards, bearing on its front face a 16
digit identity number 11, an alphabetic checksum 12 and optionally
an expiry date 13. The identity number, alphabetic checksum and
optional expiry date form the identification data to identify the
card. In the credit card system, the first four digits identify the
financial institution issuing the card whilst the remaining twelve
provide ample numbers to ensure an adequate supply of cards. The
identity number 11, alphabetic check sum 12 and optional expiry
date 13 are conveniently placed in the standard positions for a
credit card with the alphabetic check sum 12 taking the place of
the card holder name. Logos and security devices such as holograms
may be provided as is conventional. On the reverse, the card
carries a magnetic strip 14 in which the identification data
printed on the front face are encoded in a standard format. A
signature strip is not normally provided but can be for use in
face-to-face transactions such as shop purchases or
over-the-counter cash withdrawals. Additionally, a space may be
provided for the user to write his or her name and address as a
countermeasure against theft. The card 10 may also incorporate an
embedded IC and contacts conforming to "Smart Card" standards.
[0027] Relevant international (ISO) standards relating to credit
cards include:
[0028] 7810 Identification Cards--Physical Characteristics
[0029] 7811-1 Identification Cards- Recording Technique Part 1:
Embossing
[0030] 7811-2 Identification Cards- Recording Technique Part 2:
Magnetic Stripe
[0031] 7811-3 Identification Cards- Recording Technique Part 3:
Location of Embossed Characters on ID-1 cards
[0032] 7811-4 Identification Cards- Recording Technique Part 4:
Location of read-only magnetic tracks--Tracks 1 & 2
[0033] 7811-5 Identification Cards- Recording Technique Part 5:
Location of read-write magnetic track--Track 3
[0034] 7811-6 Identification Cards- Recording Technique Part 6:
Magnetic Stripe--High Coercivity
[0035] 7813 Identification Cards--Financial Transaction Cards
[0036] 7816-1 Identification Cards--Integrated Circuit(s) Cards
with Contacts Part 1: Physical Characteristics
[0037] 7816-2 Identification Cards--Integrated Circuit(s) Cards
with Contacts Part 2: Dimensions and Location of the Contacts
[0038] The above standards are hereby incorporated herein by
reference.
[0039] The assignment of an initial value to the card, and the
recordal of that value in relation to the card identification data
in balance database 20, may be carried out at manufacture or, if
the card retailer is provided with a suitably equipped terminal, at
the point of sale. If values are assigned to the cards at
manufacture then cards of a range of values, such as 10, 20, 50,
100, 200, 500 units of currency, e.g. US Dollars or Pounds
Sterling, are preferably provided. The initial value of the card
may be printed on the card itself and/or any associated packaging.
If the value is assigned at the point of sale, greater flexibility
in the value assigned may be permitted.
[0040] Payment of the value of the issued card can be made in any
form accepted by the retailer, e.g. cash, cheque, credit card. The
payment required for the card need not be exactly equal to the
value of the card issued; a small premium may be charged (either as
a fixed sum or a percentage of the issued card value) in some
circumstances and a discount may be given in others. Payment for
the card need not be made in the same currency as the nominal value
of the issued card. To prevent fraud and money laundering a maximum
value for issued cards may be set.
[0041] The card is preferably provided in a small package that will
include instructions for use and any conditions of use,
disclaimers, warnings, etc. Preferably the packaging will be sealed
and tamper-evident with the card identification data not visible
prior to opening the package. This will reassure the user that the
card has not been used or tampered with by the retailer. Included
in the instructions is a 4 digit Personal Identification Number
(PIN) that is used for validation of the card and in some
transactions. For additional security the PIN number is preferably
covered by a tamper-evident opaque covering such as used in
scratchcards and the like.
[0042] After purchase and before first use, the user is required to
validate the card by contacting the validation centre and providing
the card identification data and PIN. This process may be done by
any suitable means, e.g. by telephone, via the Internet or in
selected ATM machines of participating financial institutions. At
this point the user may be given the opportunity to register his or
her ownership of the card as a countermeasure against theft.
However, to preserve anonymity, where desired, the provision of
personal details of the card owner is not obligatory.
[0043] Once the card has been validated, the user may use it to
make purchases of goods in any outlet accepting credit cards of the
relevant type. Transactions with the pre-pay card of the present
invention are essentially the same as ordinary credit card
transactions but with one important exception. Because of the
pre-pay nature of the cards and because the user of the card will
usually be unknown to the card issuer, it is important that all
transactions on the card be authorised. In the authorisation
process, described further below, cleared transactions are debited
to the card balance and any transaction for which insufficient
funds are available is rejected. No transaction is permitted to
take the card balance below zero. With conventional credit cards, a
shop may have a floor limit and only authorize transactions above
that amount. An existing system, the VISA ELECTRON (RTM) system,
requires that all transactions with cards issued in this system be
authorized on-line.
[0044] Examples of forms of transaction that can be made with the
pre-pay card 10 include: Internet transactions, step S5; telephone
transactions, step S6; shop transactions, step S7; and cash
withdrawals, step S8. These transactions are described in further
detail below. In any transaction, the card value stored in database
20 is decremented by the amount of the transaction, after
conversion to the currency of the pre-pay card, if necessary.
[0045] If a balance still remains to the card after a transaction,
the user can use the card again for further transactions, as
desired. If the balance is reduced to zero, a facility to recharge
the card, step S11, can be provided and the user proceeds to this
if desired, step S10. If recharge is not possible, or not desired
by the user, the empty pre-pay card is discarded, step S12.
[0046] An Internet transaction is shown in more detail in FIG. 2.
Whilst browsing an e-merchant's website, the user may desire to
make a purchase. At a suitable point after selection of the desired
goods, the user will be requested to enter his/her card details for
payment. If the e-merchant is set up to accept credit cards of the
system with which the pre-pay card of the present invention is
compatible, the user inputs the sixteen digit card number and the
alphabetic checksum in the form provided on his or her browser,
step S51. These details are then encrypted, step S52, if the user's
browser supports the relevant encryption standard, and transmitted,
step S53, to the e-merchant where they are decrypted, step S54. At
this stage, if the alphabetic checksum includes an encoded check
digit or parity digit, an initial verification that the details
provided relate to a potentially valid pre-pay card can be
performed.
[0047] The next and most important step is for the e-merchant to
seek authorisation for the transaction. The e-merchant therefore
transmits an authorisation request, either directly to the issuer
of the pre-pay card 10 or via the relevant credit card clearing
system. The authorisation request should be encrypted before
transmission, step S54a, but it may be possible to omit this step,
e.g. if the communication channel between merchant and authoriser
is intrinsically secure. The authorization request will include the
card identification data, transaction amount and currency and
details of the e-merchant. For fraud spotting and statistical
purposes, the authorisation request may include details of the
goods or services to be purchased. The authorisation process, step
S100, which is described further below, returns an authorisation
code or a rejection of the transaction. The merchant notes this,
step S56 and then completes the transaction, step S57, or rejects
it, step S58. If a transaction is rejected because there are
insufficient funds remaining to the card, the user may be offered
the opportunity to make up the total amount of the transaction
using more than one pre-pay card, or some other form of
payment.
[0048] A telephone transaction, shown in FIG. 3, is similar.
Instead of entering the card details into a form on a web browser,
the user will read, them over the telephone to an operator, step
S61, who enters them into a terminal, step S62, which encrypts
them, if necessary step S63, and transmits the authorisation
request, step S64, to the pre-pay card issuer or the credit card
clearing system. As with an Internet transaction, the result of the
authorisation process S100 is received, step S65, and the
transaction completed, step S66, or rejected, step S67. In some
fully automated telephone services, the user may select goods or
services, e.g. cinema tickets, to purchase by following telephone
prompts and enter the card details using a telephone keypad. In
this type of transaction, the alphabetic checksum may not be
required.
[0049] A shop transaction is shown in FIG. 4 and again is similar
to an Internet transaction. The user will present the card to the
merchant, step S71, who will enter the details into a terminal,
step S72, usually by swiping the card through a card reader. The
terminal automatically encrypts the details as necessary, step S73,
and transmits the authorisation request, step S74. Completion or
rejection of the transaction, steps S76 to S78, is as normal. It is
particularly important with shop trades that all transactions are
cleared, since shop assistants may be used to transactions not
requiring authorisation, and for this reason transactions effected
on paper vouchers may be prohibited.
[0050] Cash withdrawals, shown in FIG. 5, may be made through
Automated Teller Machines (ATMs) of participating financial
institutions. These proceed in the usual manner: the user inserts
the card into the ATM, step S81; enters the PIN when prompted, step
S82; and the amount of cash desired, step S83. An authorisation
request is prepared and transmitted, step S84, and dependent on the
result of the authorisation the cash requested is dispensed, step
S86, or the request rejected, step S87. Again, the authorisation
request should be encrypted before transmission, step S83a, but
again it may be possible to omit this step, e.g. if the
communication channel between merchant and authoriser is
intrinsically secure. If the amount of cash requested by the user
is greater than that available to the card but some funds are
available, the user may be offered a reduced amount. To reduce the
opportunity for fraud or money laundering, cash withdrawals may be
limited in amount, e.g. to 50% of the initial value of the card, in
total or per transaction and/or in frequency, e.g. once per card or
once per day. Cash withdrawals may be prohibited entirely on low
denomination cards and may attract a fixed or percentage
transaction fee. Over-the-counter transactions may also be
permitted.
[0051] The authorisation process is shown in FIG. 6. This process
is essentially the same, whichever type of transaction is to be
authorised. Firstly, in step S101 the authorisation request is
decrypted and the source of it is verified. Next, an initial
verification that the card number is from a possible pre-pay card
is determined, step S102. At this stage the expiry date, if
provided, may also be checked. In step S103, the balance database
20 is consulted to verify that the card number 11 matches the
alphabetic checksum 12. Database 20 is also consulted, step S104,
to determine if the card is flagged as stolen or otherwise invalid.
In step S105, the remaining balance is compared to the transaction
value, converted to the relevant currency as necessary, to
determined whether sufficient funds are available. For some forms
of transactions, e.g. cash withdrawals, additional conditions may
be imposed and these are taken into account in this step. For
example, the transaction may not be permitted to reduce the card
balance below an minimum residual amount or the past history of
transactions may be considered.
[0052] If all of steps S102 to S106 have generated positive
answers, the card balance is decremented at step S106 by the
transaction value and any transaction charges that may be incurred,
e.g. for cash withdrawals. The transaction is then authorised and
an authorisation code transmitted to the requester of the
authorisation. At the same time a corresponding credit is made to
the merchant's account, which may be held at the pre-pay card
issuer or with another financial institution. The credit to the
merchant's account may be made after deduction of a fixed or
percentage transaction fee. However, if any of steps S102 to S105
produce a negative answer, the process proceeds directly to reject
the transaction and an appropriate message is sent to the requester
of the authorisation.
[0053] The pre-pay card system can allow for cards to be
replenished when the initial balance has been spent, however this
feature may be limited to certain types of card or omitted. Where
replenishment, or recharging, of cards is permitted, a process for
this is illustrated in FIG. 7. The recharge process is carried out
by an authorised financial institution capable of verifying the
payment to be credited to the card and may also be carried out
electronically by transfer from a conventional credit or charge
card. Electronic transfers from on-line banking systems may also be
permitted, as may transfers between pre-pay cards of the invention.
In the recharging process, first the details of the card to be
credited are verified and double checked, step S111. If the owner
of the card has registered his details with the pre-pay card
issuer, these may be used to confirm that the correct card is to be
credited. Next, in step S112, the payment to be credited to the
card is verified. How this is done will depend on the nature of the
payment. However it is important that the payment is verified
thoroughly since, owing to the anonymous nature of the pre-pay
card, if the credited amount is spent quickly it will not be
possible to recover that money if the payment for the recharge is
subsequently rejected. Once both card details and payment are
verified the card balance is incremented in the balance database
20. A receipt may be issued to the user.
[0054] To prevent fraud and money laundering, credits to pre-pay
cards are generally limited. However, provision should be made for
incorrect transactions to be credited and for credits to be made to
a pre-pay card when goods are returned, e.g. as faulty.
[0055] Malfunctioning cards, e.g. if the magnetic strip ceases to
be readable, can be returned to an authorised outlet, or
participating financial institution, for replacement by a new card.
In the event of theft, any remaining balance can be frozen when the
theft is reported and refunded, or transferred to a new card, on
proof of purchase.
[0056] Whilst we have described above an embodiment of the present
invention, it will be appreciated that the present invention may be
practised otherwise than as described. The scope of the invention
is to be determined by the appended claims rather than the
foregoing description.
* * * * *